Fiscal Year

[cferg]

I am using a fiscal year for the taxes for my mom's estate. The year encompasses the end of 2021 through the beginning of 2022. No payments were made to the heirs, etc. in 2021. The estate funds were dispersed in February of 2022. My question concerns the K-1's to the heirs and the 1099 for the probate lawyer. Do I use 2021 forms and send them out now, or do I wait until the 2022 forms come out and use those? The people they are going to use a calendar year for their taxes. 

[Mike9241]

file using 2021 forms with a fiscal year ending in 2022. if you tried using 2022 forms it wouldn't work and those forms won't be available til 2024. the 1099 is filed on a 2021 form for the payments made through 12/31/2021.

the heirs will report their k-1 on their 2022 returns.

[cferg]

I am using 2021 Federal and State tax return forms for the estate taxes with a fiscal year encompassing part of 2021 and part of 2022. My question is about the 1099 to the lawyer and the K-1's to the heirs, who all use a calendar year for their tax returns. There were no payments to either the lawyer or the heirs in 2021. The estate money was distributed this year (2022) to the heirs and the attorney. Do I use the current (2021) 1099 and K-1 forms or wait to send them out, to both the recipients and the tax departments, when the 2022 forms become available? If I use 2021 forms would they have to claim any taxable income on their 2021 tax forms, even though the money was not received until 2022? I feel like I should just wait until the end of the calendar year to send out the 1099 and K-1's so any taxable income is claimed on 2022 tax returns.  

[ErnieS0]

Use 2021 forms as Tax Champ @Mike9241 says.

The Form 1041 instructions say: "File the 2021 return for calendar year 2021 and fiscal years beginning in 2021 and ending in 2022.

"The 2021 Form 1041 may also be used for a tax year beginning in 2022 if the 2022 Form 1041 isn't available by the time the estate or trust is required to file its tax return. However, the estate or trust must show its 2022 tax year on the 2021 Form 1041 and incorporate any tax law changes that are effective for tax years beginning after 2021."

The K-1 recipients will report the income in 2022, the year the estate's fiscal year ends, as Tax Champ @Mike9241 said.

The IRS has specific rules about when to file and when to report income. If you have doubts, hire a local accountant prepare your Form 1041 rather than attempting this yourself.

[cferg]

I totally understand that I use the 2021 1041 and OR-41 to file the estate taxes. In fact, those are ready to be sent in. My concern was the timing of the 1099 to the probate attorney and the K-1's for the heirs. The K-1's aren't a big concern because there are no taxable disbursements/payments to show on them. However, I was mostly wondering about the 1099 to the attorney, who got paid in 2022. Since the K-1's don't have to be sent out until the end of this year may I assume that is the same for the attorney's 1099 for the money he was paid this year? There were no financial disbursements in 2021. The disbursements were all sent to the recipients this year and probate has been closed.

[RobertB4444]

Your tax return is due by the 15th day of the fourth month following the end of your tax year.  That's why you're stuck filing with 2021 forms.

All filers have the same deadline when it comes to 1099s and W2s.  That's Jan 31st for the preceding calendar year.  So you will send out all 1099s and W2s for payments made in calendar 2022 on 2022 forms by January 31st of 2023.

[cferg]

Thank you. That is exactly what I was trying to ascertain.